Tag Archives: How to name a brewery

30 Days to go …. Running out of cash

Where the hell has all our cash gone?  Sometimes I wonder how this business is costing us so much money.  How the heck do other breweries start a brewery for so much less than we are spending?  I know we have bitten off more than we can chew, but seriously, what the heck.  Running out of cash is not an option for our business, so we have moved on to plan B, plan C and soon plan D.

We have raised $1,200,000 and we figured that would be enough to get us to day 1.  As you know from reading my previous blog posts (check the finances category), it was a process getting to a point that we were comfortable.  About 8 months ago it seemed like we would go over by about 20% and so we secured a loan and line of credit to cover this amount.  We felt comfortable we would have more than enough to get through the tough times to day 1, and then profitability.

Surprise, surprise, a few things go over and all of a sudden we are projecting a cash shortage starting about 60 days after we swing open our doors, that reaches a maximum about 180 days after we open for business.  Thats right, even though we will be open and selling beer, and doing well, we will still be running out of cash.  It makes us scratch our head and realize the importance of keeping our costs down, and brewing some kick ass, killer beer.

So we have a few options for gaining access to this additional funding.  If you come to a situation like ours, here are the paths you can take to secure medium term financing (longer than 12 months, but shorter than 5 years).

  1. Get funding from your shareholders.  Maybe you have a shareholder that has deep pockets and is willing to lend you some cash for a short-term to help with your cash crunch.
  2. Get financing from the BDC.  The BDC is able to help with financing, especially if you have equipment or machinery that you are able to secure the loan against.
  3. Raise additional money.  Either from your current investors, or another batch of new investors who can help you keep your loan commitments down and your cash position positive.
  4. Owners lend money to company.  Thats right, time to put your money where your mouth is.  Take a line of credit that you have personally, and sign over the funds to the business.
  5. Pre-sale some of your products.  Thats right, maybe you can sell some of your capacity to another brewery, or start selling your merchandise before you open in order to help with smaller amounts of money.  This won’t work with larger sums.

I am sure there other ways of getting money, but these are the options we have available to us.  We have 2 strong contenders and 1 outlier, and we think one of these is going to work out for us.

One thing is for sure, manage your money, stay on top of your finances, and don’t forget to always have your next 3 possible steps planned out.  If you don’t, you might get to a fork in the road and have insufficient options available.  This is not a good place to be, especially when you are near opening day.  It would suck to come this far and have it fall to peaces at this point.

One of these options will provide us the money we need, and we hope we make the right choice.  Only time will tell whether or not we did make the correct choice.

32 Days to Go ….. I need a vacation

A few people in the craft beer community have told me how busy the last 30 days of starting a brewery can be.  They told me that the previous month would be like playing the minor leagues for how busy you will be in your last month.  I thought to myself, there is no way they can be right.  I am already working 15 hour days, 6 days per week, how could it get busier.

Well I guess the reality is that I am not busier than I was last month or even the month before.  In fact, we have been working our asses off for the past 5 months.  It has been non-stop and go-go-go.  But in terms of how much effort is required, I don’t think I have been able to give more than I have.  For a more mature man like me, 14 hours feels about the amount that I can do on a day-in day-out basis.  This amount of effort, allows me to see my kids a little, not overwork to the point of exhaustion, stay on top of things at the brewery, and get enough rest to keep going.

The times that I worked longer than 14 hours, I quickly become a train-wreck.  About 6 weeks ago, those who follow me on Facebook know what I am talking about.  I nearly lost my marbles, and a big part of it was how much time I was spending working, and also thinking about work.

What you will find is that you need to find your balance.  And that means you will need to go up and down each side of the fulcrum to get it right.  Too little effort, you will not get everything done and you will find yourself being less productive.  Too much effort, you will be tired, stressed and feel like you are going to have a break-down.  My 14 hours per day, usually goes something like this:

  • 4:00 am to 8:00 am – Work 3 hours 45 minutes straight until I have to get the kids ready for school.  Sometime I do sleep in until 4:30am
  • 8:00 am to 8:45 am – get kids ready for school and drop them off (I love this part of my day and wouldn’t trade it for the world)
  • 8:45 am to 4:45 pm – Work a combination at the brewery (mostly) and some days at home (accounting, business plan, etc)
  • 4:45 pm to 8:00 pm – Do a little work in between hanging out with my kids, coaching, driving kids to activities, etc
  • 8:00 pm to 10:00 pm – finish work from the day and set my to-do list for the following day

I think you need to find what you are going to cut out of your life.  I personally value my family too much not to spend every evening from 5pm to bedtime with them.  Sure there is the odd time, I have evening work, things to do, etc, but I couldn’t imagine not spending 4 night per week with them, helping with homework, doing crafts, etc.  It means the world to me and I would never give it up.

What are you going to give up when the time comes to work 14 hours a day, or more?  Family time, friends, sports, reading books, video games, etc.  I gave up hanging out with friends, exercising every day, puttering in my garden (I do miss this most days), and spending a lot of time with my wife.  For now, we are spending the bare minimum in hopes that we will have time together in the future.  She is such a good partner to go through this with.

Time to go, I need to send a few emails and plan my Tuesday!

33 Days to go …. Hiring Employees

One thing we have learned is to leave LOTS of time for your first hire(s).  The process of hiring someone is full of ups and downs, offers, counter-offers, negotiations, discussions with lawyers, time for reflection, and a few other variables.  Ultimately, there is a saying that says, “hire slow and fire fast,”and it is a very worthwhile thing to take note of when going through this process.

Its not that we have or anywhere near firing someone, but giving yourself time to find the right person, can mean a bunch of time that you never thought it would take.  For us, we are still not 100% certain who our first hire is, for a variety of reasons.  I can only speak generally about it, but it goes like this.  You may find the right person, but you may not agree on compensation or start date, or you may find the wrong person but everything seems so easy to move forward, but it still feels like a square peg in a round hole.

This is the generalities I can make from things on our side:

  • Your first hire is super important, so make sure you make the right choice here
  • Look for someone who can do a variety of tasks, as you will have a lot of things to do in the brewery that you will need a hand with
  • Get an employment agreement early on so that you are not struggling with this at the wrong time
  • Be definitive in your actions and your approach to things.  Go with your guy, but also do thorough checks and questioning to make sure all is good
  • An ability to work hard and honesty are two traits that should be found in every candidate you are considering.  These should not be anyone who you would question this with
  • Structure the agreement so that it is beneficial to both your company and to the employee.
  • Overpay for the right person.

Both Iain and I have little experience hiring staff.  Actually Iain has more than I do.  I have been interviewed a lot of times, but never on the other side of the table.  It is a little different, and definitely not as nerve racking, but it is tough and intense all the same.  I can think back to people who were great interviewers, and others …. not so much.

We have worked with our lawyer to create the employment agreement that we have.  It is a good place to start, as they usually have boilerplates that you can add things and take away other stuff to suite your needs and what you want to achieve.  If you need a employment agreement boilerplate, there are lots on the internet.  Unfortunately, I can’t share our agreement with you, otherwise I would.

36 days out … Use a Notebook and to do list!

Of the many things this process has taught me, there are several that stand out as key learnings overall.  Its hard to say how one should practice for these things, but likely knowing about them, reading books about them, and talking with others about them are a huge help.

The first thing that I have learned is how to get things done.  I feel like I have always been quite productive in my life.  Not quite sure where I got this, but ever since I turned 30, I have increasingly become a highly productive machine.  To that end, one of the best books I read for preparing for this venture was Getting Things Done by David Allen.  You will not be disappointed if you make the time to read this book.  It will help you be more productive with your days, and organize your life to stay on top of all the details.

Another trait that I knew was deep inside me, but never really exposed is an ability to work long hours with little sleep.  Normally, I am a high energy guy, so when it comes to sleep I like to get 7 hours of bed time a night.  Continuing to exercise and stay fit means that sleep is important.  However, for the past couple months, this has been shaved down to about 5.5 – 6 hours per night, with one night a week at 12.  I find I am capable of this, definitely a little more grumpy, unhappy, etc, but that should be expected.  Find your ability to work long and hard, and you will be in a good position to succeed.

One last trait, one that might just possibly be the most important trait is the ability to not get overwhelmed by the gravity of this situation.  Really, this is one of the most stressful and intense situations an average person could go through, and with the help of friends and family, I have managed to stay positive and on track.  If you have a tough time dealing with stress and multi-tasking, you will need to either take course, read or learn to deal with this possibility.

Another huge help is always having a notebook that contains a to do list.  Make sure you cross things out when they are complete, so you can get the satisfaction of accomplishing something. To do lists are key as are notebooks with all your notes from meetings and discussions.  I can’t tell you how many times I have referenced the book to find something I have been looking for.

Until next post, keep on keeping on!

An Uncomfortable Decision

Throughout the process of starting any business, you learn quickly to deal with unforeseen circumstances on a regular basis.  Things like missed deliveries, unexpected costs, delays by a government body, missing parts, etc.  Recently we had one of the biggest curveballs sent our way, from the most unlikely of places.  Our Structural Engineer who has been working with us a lot lately, just had a heart attack.

For starters, we wish him all the best in his return to health.  Having worked as a pharmaceutical salesperson, I have learned the effect ill health can have on a persons physical and mental well being.  It can effect different people in a number of ways.  So we wish our engineer all the best in getting back to health after such a traumatic experience.

Let me give you a little context to the situation.  A structural engineer is pretty important on most any building process, as there are lots of decisions to be made around making sure big components are sound.  Things like; making sure our floors are structurally sound, the grain hopper is fastened to the building properly, connecting the new curbs to the old concrete slab properly, and making sure the walls and ceilings are properly built so they can handle a heavy load …. you get the idea.  So having someone that understands your project, and someone that works within your timeline is key.

More importantly, when you are at the point our brewery build-out is right now, a structural engineer and their work is critical in moving things ahead.  For instance, there is a list of about 10 things that our engineer is working on, and without his guidance and advice, we can’t make any progress.

Let me now recap a few of our issues with our engineer and you will see why we need to make such an uncomfortable decision.  We picked our structural engineer about 6 months ago, and like a lot of decisions we make, it was based on personality, a referral and price.  He was not from a company or firm, rather just a guy who works on his own … he is the only employee.  Early in the process of things, he gave us some advice, and it seemed very good and we looked forward to working with him on things.

Fast forward to the day we took possession:  February 1st, 2014.  All of a sudden we needed our engineer to start producing some drawings and work for us, but our emails and calls went unanswered.  We reconnected with our architect over this, and they handled things, allaying our concerns and repointing everyone in the right direction (they are good at this).  As our general contractor kept sinking his teeth into the building of our brewery, he had more and more questions for the structural engineer.

He put these questions to the engineer on a regular basis for the next month, until about the beginning of April, when we really started to worry about not getting drawings and answers on what exactly he was supposed to be doing with certain parts of the brewery.  This time we contacted the engineer directly to tell him our concerns.  He gave us a few small little answers, but nothing concrete.  Fast forward to the last week of April, and it was now critical to get answers.  We needed to know about drain construction, floors, connecting old cement with new, etc., and we still didn’t get or have any answers.

A meeting was planned at the end of April to discuss what we needed, and how urgently we needed it, and it went amazingly well.  The engineer agreed that he was late in getting stuff to us, and promised we would have this information for last Friday.  We felt really good about things and moved forward with a positive attitude.

You can probably see where this is going.  Last Friday came and went, and we received nothing. We were pretty disappointed to say the least.  The bottom line is that we need these drawings for work that is getting done right now, and without them, we are opening ourselves up to major problems.  The biggest of these is a delayed opening, which means we will loose even more money in our first year.

Well the news got even worse on Monday morning, as we learned that this engineer had a heart attack and was in the hospital.  And since he is from a company of 1, there was no way to get anything he has done.  So what would you do?  Do you show compassion and wait for him to get out of the hospital, and let him finish the project …. or do we move in a different direction, avoiding any further delays.  We ground our teeth on this one, but as of yesterday we have moved on with a new structural engineer.

In one way its good, as we get a fresh start with someone who hopefully be a little more proactive on getting things done.  Moreover, in our initial consultation he gave us a lot of really good information and advice, something we didn’t get from our last engineer.  In the another way, moving on with someone else is bad.  We have lost all the work that he completed, there is definitely going to be some bad blood over the bill and invoice for work he has done, but not delivered to us on, and we feel bad kicking him when he is down.

At the end of the day, we need to move this process forward now.  So waiting for our engineer to heal and get better, while the right thing to do, is not something we are doing.  We do wish our contractor all the best, and we hope to recovers and gets back on his feet ASAP.  This is just one of the harsh decisions you have to make when starting a business, one that kind of makes you uncomfortable.

 

General Contractors and Sub-contractors

One of the most important decisions you can make is around construction of your brewery.  Do you want to have a general contractor guide the process, or do you feel like you have enough time and energy to take the lead on piecing together the build-out?  Depending on your skills, the amount of time you have, your preference for this kind of thing and most importantly your budget, your decision may already be made for you.

We decided to work with a general contractor, Graham Disher of Disher Contracting.  The process for looking to team with a contractor was relatively painless, as at the end of the day, we decided to work with someone that was willing to work with our constraints.  In other words, we are able to offer some ownership shares in lieu of having to raise the money and then pay it as a fee.  In fact, because craft beer is growing so much right now, you could take this approach with many of the different trades that come through your space, and you would be able to do well for yourself in foregoing fees.

At any rate, Graham was also a good choice for more than just his willingness to work with us.  He had the time to dedicate towards our project, he has good experience that will serve us well in various aspects of the buildout, he was trustworthy (and he has continued to show us that), and what he doesn’t know, he goes about learning in a quick and positive manner.  When you add all these things up, we felt good about teaming with Graham Disher, and we would not hesitate to recommend him for your brewery (once he is finished ours of course).  Get in touch with me if you want to be connected, as he is one of those contractors who is too busy to worry about a website and all that.  In other words, he is hard to find online.

Back to the process of looking for a general contractor.  We met with 4 different GC’s after tossing around the names of about 12 or 15 that were passed our way or in our “rolodex”.  The 4 we met with all had experience, but were all at different stages of their business life cycle.  One company had been around for about 30 years, another just a couple years.  When you meet with these companies you take a list of questions, usually around the process of working with them, budgeting, who is on job, costs, estimates for work, their ideas for your job, experience in this field, etc.  When you start asking questions you will clearly see that there is a big difference in how each of these guys run their business.  Everything from their presentation, to how they budget, when they invoice, what jobs they sub-out, and so on.

What we came to was a list of pro’s and con’s for each contractor, which you then weigh against all the other factors.  Big ones for us include:  What is their mark-up, when could they start, who is going to be site supervisor, how much time are they going to dedicate, how many other jobs do they have, what is their crew like, what is their vision for the project,  what is their timeframe, what are the biggest challenges and how will they overcome, how are they with change … you get the drift.

As for subcontractors, this is really a 2 step process.  The first is to meet with various sub trades that are going to be important to your job.  Likely you will meet with electrical and mechanical  trades people.  You will also do this with the help of your general contractor.   The first objective of meeting with them is to understand what changes you can make to your plans to save money, while at the same time meeting with them to understand who is going to be the best fit for your project.  We met with 4 or 5 electrical and 4 or 5 mechanical contractors.  That allowed us to get some feedback and gauge who was going to work within our constraints the best.  Usually you are basing discussions off a set of drawings that aren’t yet complete.

Hopefully soon after this you will get some IFC drawings for the build-out, and then you can distribute to the 2 or 3 sub-trades that you think would be the best fit.  Once you get the estimates back, you can play them however you like, to try and get a better deal and position the job in the best position for your interests.  For us, number one was not money believe it or not … it was time.  Who could get started and complete the job (in other words, who could dedicate the most manpower to this job) in a fair period of time.  Second was money for us.  Of course all the companies we met with had the proper experience and were keen to be a part of this … that was just standard.

We picked our Electrical Contractor – Clear Energy Solutions.  They have solution in their name for a reason.  They offered us great advice on what to change and what could be streamlined to save money and time.  I would highly recommend these guys to  be at least a part of the bidding process.

We picked our Mechanical Contractor – Nathan from Meridian.  They are a great outfit that has experience in residential and commercial work, they were willing to work with our timeline and they were excellent on price.  I would also recommend these guys to anyone else for all their mechanical needs.

If you want more information on any of this stuff, let me know and I would be happy to add to the information I have put out there.  Bottom line, there are lots of great companies and lots of bad companies and general contractors to work with, just make sure you take your time to make the right choice.  Saving a little money won’t seem worth it if you have to spend extra time on a project.

Floorplan Update and Best Practices

Some of you may have come across a story written by Greg Clow of Canadian Beer News.  If you live in Canada and you are serious about beer, you should be checking his website on a regular basis.  Click here to link with our story and Canadian Beer News.  His article focused on Strange Fellows operations and what our full floor plan will look like when complete.

I have included both the layout we have moved forward with as well as the side profile of the space, so you can get a sense of the way our operations will look.  Not unlike anything else we put out there, things will change somewhat as we move ahead; however, 90% of what is on paper here will be represented in our build-out at the space.  Once you commit to submitting building, electrical and mechanical permits, you are also committing to what you have on paper.  So in other words, the size of a window in our tasting room that overlooks the brew house may get bigger, but we have committed the location for the bathrooms, the trade waster interceptor and the trenches.

Brewhouse Layout March 2014

Brewhouse Profile March 2014

We have allocated a total of $12,500 for permits throughout this process.  I have blogged about them a little bit under The Process of Starting a Craft Brewery, subcategory X:  Government Stuff.  There are lots of permits you need and getting them all in a timely manner is important.  To be honest, the process of preparing for permits and approval is one of the keys to getting this process right.  In short, for your business to move forward you need to submit for your permits in a timely manner, with information that is well thought out, thorough and correct.  Changes or missed steps here will cost you down the road.  Read more about permits at the page linked above (and I will add more details in the next week).

Anyhow, coming full circle here, our floor plan was a real labour of love.  Like any decisions you make with a partner, there is give and take.  However, when you add in an architect, mechanical and electrical engineers, a general contractor and your finances, you get a mish-mash of opinion and information.  You can never make a decision without effecting every other decision you have made in the past, and every other decision you will make in the future.

Some of the keys when creating a floor plan are as follows:

  • Keep everything as central as possible.  The longer runs you have for any electrical or mechanical, the more cash you will bleed.  For us, moving our main electrical panel 10 feet saved us $3,000.  So you can see that small changes can make a big difference.
  • Plan for the future, but prioritize getting to day 1.  It is important to think a couple of steps ahead here, at least that is what I have heard from other breweries, but don’t lose sight that you need to get to day 1.
  • Look to save money at every step.  Ok, maybe you are better at this than I am, but we are in full cash saving mode, and we feel like we have been for a long time.  Any chance we can save money on something, we are doing it.
  • Tasting room and Retail area.  A huge part of all these breweries starting up in Vancouver is the ability to sell your products from your business.  It takes what was once an impossible task, and makes it so much more realistic of an opportunity.  So make sure you design a space that works for your brewery.  For us we wanted something intimate, open to the brewery, and simple.
  • Work with sub trades early in the process.  You don’t have to pick who you are working with, but bouncing plans off them will give you real world answers to questions you have.  It was also help you find savings and efficiencies in your space.
  • Another dilemma on decisions.  You can have things done quickly, you can have things done for your budget, and you can have things done inline with your dreams, but at best you will get 2 of these things, but most of the time you will only get 1 of these things.  What will you pick?
  • Call the room where you mill your grains a “grain cracking room”.  Trust me on this one, it will save you a bunch of headaches at the City
  • Depending on if you are focusing on production or focusing on tasting room/retail sales, your layout may be different.  For us, we are a production brewery first, so the layout and design of the space tried to take this into account as much as possible.  Process workflow, material in and material out, future expansion are all important to us, and are reflected in our space.
  • Keep your cooler close to the tasting room.  Iain has so much experience with this kind of thing, that he is adamant that these 2 things need to be connected.  He talks about the shorter the run of lines, and being able to connect our taps to tanks instead of kegs will save us heaps of time.

What really gets us excited about our space is the connection between the tasting room and the brewery.  When you are sitting in our tasting room, you will quite literally be 10 feet away from the brewhouse.  Want to watch Iain add hops to a brew, just sit back enjoy your beer and watch from your perch.  You will also be able to have a first hand view of the barrel storage area, which we think is a really cool thing.  We also think the art gallery will add a nice connection to the local community, and we hope the growler and retail area will have good process flow so as to not back-up too much.

As I have always said, Iain is really good with this kind of thing, so if you have questions about how to lay your brewery out, feel free to contact us.  At the end of the day, follow your instincts on the way things should be.  Whether you have experience with this kind of thing or not, make sure you follow what you would want as a consumer.  You will deal with enough people along the way that aren’t into craft beer (like contractors, architects, etc) that their opinion will help to balance yours out.  Stay positive and you will find the way.

 

 

 

 

 

 

 

 

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